S.F. Street Fight: Ride-Share Startups Battling Taxis, Regulators

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Here are three San Francisco realities: Steep hills. A cold summer. And boy, are cabs hard to find sometimes.

The hills and the weather? That’s just nature. But the taxis?

Several ride-sharing startups are trying to take advantage of discontent with the seeming scarcity of taxis on city streets. But the new services are facing opposition from both the taxi industry and regulators.

Lyft is one of the best-known rideshare firms. You might have seen one of their cars around. They’re the ones with the pink mustaches on the front, reflecting an approach that’s supposed to be fresh and kind of fun.

The service connects private vehicle owners with riders who flag them down virtually, using a smart phone app.

Drivers work shifts, and passengers pay what Lyft calls a “donation," also handled through the app. The company takes a 20 percent cut.

John Zimmer started Zimride, a service that matches drivers and riders for long trips, such as from San Francisco to Los Angeles. He launched Lyft and describes it as a safer way to ride-share.

"One of the main reasons we did it, is because our alternative as users of these services was Craigslist, where I didn’t know who the person was," Zimmer says. "And we wanted to build something that could be a more trusted platform."

Zimmer also sells Lyft as an environmentally friendly way to share resources while helping car owners defray costs.

"Typically these are members from the local community who have a little extra time, are looking to make a few extra dollars," he says. "This is not something that they are doing as, you know, in the same way that a cab driver is approaching what they are doing."

But that’s not so clear to some of the Lyft drivers.

Nancy Tcheou, 26, has been driving for Lyft for several months and says it’s her primary income.

"It’s suiting me for now. I actually am having a lot of fun. And it’s a good break from the regular start-up world, the regular nine-to-five kind of thing," Tcheou says.

Roadblock ahead?

But now Lyft and other startup ride-share services could be about to hit a roadblock.

San Francisco's taxi industry considers them unfair competition. And the California Public Utilities Commission, which regulates limo services, says they’re breaking the law. Over the past few months, the agency has sent cease-and-desist letters to Lyft and at least two similar services, SideCar and Uber.

The companies argue they fall outside traditional regulations because of the new way they link drivers and riders. CPUC General Counsel Frank Lindh doesn’t buy it, and says the real issue isn’t innovation but public safety.

"We don’t think their use of an app as distinct from an old-fashioned telephone matters," he says. "In the analysis here, they are providing limousine services on the streets of California and the public is entitled to assurance of safe operation."

Lindh says to comply, the new services need commercial licenses. The companies have so far refused to comply with the agency’s demand to suspend operations, despite the threat of fines that could amount to thousands of dollars a day for every vehicle in service. They say they’re confident they’ll be able to work things out with regulators.

Cabbies welcome crackdown

Taxi companies and drivers are glad regulators are cracking down on what they see as illegal cabs that are stealing their business.

Athan Rebelos, general manager at San Francisco’s De Soto Cab, says the startups are getting ahead by skirting rules he's required to obey. "I could put a thousand more cabs on the street in a month if I did not have to get licenses for them," Rebelos says. "There would not be a service issue any more. But I can’t do that. I’ve been following the law."

The “law” Rebelos is talking about is the city’s regulation of cabs. San Francisco’s Municipal Transportation Agency keeps a lid on the number of medallions, or operating permits, it issues to cab owners. The city has licensed about 1,500 cabs. In response to complaints about service, and with high-profile events like next year's America's Cup looming, it’s doling out 200 temporary permits.

Pleading for new technology

Brad Newsham has been driving a taxi in the city for 27 years and says the ride-sharing companies are just the latest assault on the cabbie way of life. He says the new tools the startups use are something cab drivers have wanted for a long time. But he says the MTA has refused to listen.

"We have been dying to have this sort of technology in the cab industry," Newsham says. "They have ignored our requests. These other companies have come in and have created what the public has wanted, what we have wanted, and naturally it’s a big hit."

MTA chief Ed Reiskin says the state, not the city, is in charge of dealing with the ride-sharing services. What the city can control is the number of cabs on the street. He says more cabs means better service. And better service means more demand for cabs -- and that will help drivers worried about their livelihoods.

"Our ultimate responsibility is to the general public who would say almost universally that taxi service is inadequate in this city," Reiskin says.

So for now, Uber and Sidecar, and those Lyft cars with the loud pink mustaches will be sticking around. And your wait for a cab? It won’t be going away soon either.